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The UK
Electrical Wholesale Market is currently growing relatively strongly in
terms of value, compared with previous years of low or even negative
growth, despite difficult economic and trading conditions within some
sectors of the market. The total market in 2005 was estimated to be
worth some £2.97bn at wholesaler selling prices.
The market has
been relatively stable over the review period, reflecting the fact that
this is a mature market overall. In general, growth rates have been 2-4%
over the period, but during the last two years value growth has been
stronger and is expected to reach 5% in 2006, predominantly as a result
of higher raw material prices but also the result of higher activity
levels in the electrical contracting sector.
2003 proved a
difficult year for most electrical wholesalers with the market
exhibiting a negative performance and many companies suffering poor
profit margins and being forced to focus on cost saving exercises.
Although many other economic indicators such as certain parts of the
construction industry and consumer spending have performed less
positively, the electrical wholesalers market has shown strong growth in
2004 and 2005, with growth rates expected to remain strong throughout
2006.
Key factors that have contributed to
growth have been; the increasing levels of government investment in
health, education, housing and certain infrastructure sectors, a growth
in niche end-user markets including fire and security including CCTV,
lighting and portable accommodation, and continuously evolving
legislation, including energy efficiency and disability discrimination
legislation, motivating the demand for a wide range of higher
specification products, including items for hazardous areas, health and
safety products, access equipment, signage and lighting. However, one of
the main contributors to value growth in the market has been the
substantial increases in steel, copper and PVC-u prices during the
review period.
Negative influences affecting the UK
electrical wholesalers’ market have included trends to longer product
life and in certain instances lower replacement component prices which
erode the growth of market value, also a trend to increasing levels of
price competition and higher overhead costs leading to pressure on
margins. In addition, there has been increasing pressure from competing
distribution channels such as electronic component distributors and
catalogue/internet operations.
The key development in terms of
companies is that during the review period, giant building products
distribution company Wolseley UK
has entered the market, through acquiring two of the larger regional
wholesaler groups – AC Electrical
and William Wilson. This
acquisition takes the company’s electrical wholesaling division straight
into the top 5 in the industry. The leading electrical wholesaler
groups remain Edmundson Electrical,
Hagemeyer (WF
Electrical & Newey & Eyre),
City Electrical Factors and
Rexel UK (Rexel Senate &
Denmans). Cumulatively, these groups are estimated to
account for more than two thirds of the electrical wholesalers market,
having steadily expanded through organic growth and acquisition of
regional and local wholesalers.
Competing distribution channels to the
electrical wholesalers comprise the electronic component distributors,
trade catalogue/internet operations, specialist distributors, the DIY
multiples and other retailers also the builders, plumbers and H&V
merchants. In addition, direct sales from manufacturers are an
increasing competitive threat to electrical wholesalers.
The established position of electrical
wholesalers as the leading distribution channel for electrical products
is likely to be maintained at least for the core electrical product
sectors. Electrical wholesalers are
comparatively particularly strong in cables, switchgear & circuit
protection as well as test equipment, trunking & accessories and wiring
accessories. Electrical contractors remain the key customer group for
electrical wholesalers.
There is currently a significant level
of product range expansion occurring in certain sectors of the
electrical wholesalers market with considerable potential also for
generating further expansion into new sectors with less affinity to the
‘traditional’ range of general electrical wholesalers’ products. At
present, cables, lighting and switchgear & circuit protection is
estimated to account for around 50% of wholesalers’ turnover, the
balance consisting of trunking, wiring accessories, test equipment, fire
and security products, electric space heating, ventilation, water
heating and ‘other’ products.
Product areas that are currently
experiencing higher levels of growth include cables, which are subject
to significant fluctuations in the price of copper, lighting, security &
fire, electric water heating and test equipment. In the lighting sector
there has been an increasing emphasis on innovative products (LED’s,
optics, etc.) also ‘intelligence’, ‘long-life’ and ‘energy-saving’
features. Growth in the security and fire alarm systems markets is
driven by the current perceived terrorist threats, criminal activity,
levels of construction activity and legislative requirements.
The wiring accessories and switchgear
& circuit protection sectors are viewed as relatively stable. However,
these sectors in particular continue to experience severe price erosion
resulting from the dominance of imported products from the Far East.
‘Other’ products represent an area of
significant opportunity for electrical wholesalers with a continual
stream of new, innovative items, driven by diverse influences such as
legislation, renewable energy and security, with forecast levels of low,
underlying growth. ‘Other’ sectors in which sales are growing strongly
include control & automation products, data networking products, health
& safety products and batteries.
Future prospects for the market depend
on a number of factors such as the price of copper and PVC-u, levels of
construction and legislation, with energy efficiency and the WEEE
gaining the most attention at the moment.
Overall, we forecast the market to
continue to grow by around 4% per annum between 2007 and 2009, in value
terms, though perhaps the impact of the Olympics and other construction
programmes may well generate more substantial market growth around the
end of the decade.
Companies
Included in this report:-
Newey &
Eyre Group, WF Electrical, Hagemeyer UK, Edmundson Electrical Ltd, City
Electrical Factors, Rexel Senate, Denmans Electrical Wholesalers, Routeco
Plc, Tricon Automation, Rockwell Automation, William Wilson, AC
Electrical Wholesale, Eyre & Elliston Holdings, Holland House
Electrical Company, Gibbs & Dandy, Wiltshire Wholesale Electrical
Company Limited, Lockwell Lectrics, Parmley Graham, ERF Electrical
Wholesalers, Hedley & Ellis, LJB Electrical Factors, The Electric
Cable Company (Great Britain) Ltd, Orion Cables, Bridgend Group, L H
Evans Ltd, Swanson Mackay, GFE Electrical Wholesale, British Electrical
and Manufacturing Company, Alexander McKay, A N Supplies, A & D
Cartwright, Underwoods Electrical Distributors Limited, R & B Star
Ltd, Moss Electrical, HT Electrical, Crosland, David Harrison & Sons,
Northern Electrical Wholesale Limited, Edwards Bros (Dulwich), TN
Robinson Ltd, Bonus Electrical Ltd, Cowleigh Electrical Wholesalers,
Campion Electrics, Sparks Electrical Wholesalers, Harris and Russell,
Scattergood and Johnson, The Wholesale Lamp Company, KMS Electrical
Supplies, Bell Horswill, B. Danby, Eldis Electrical Distributors, H.J.
Golding, Litelm, Metropolitan Distribution (Jersey), Russells Supplies,
Scott Coppola Electrical Distributors, TEC Electrical Wholesalers,
McPhail and Meridian, etc, GL Headley, Fellows and Fullwood, R Dinning,
Potter & Sons (Swindon), Prescelly Electrical, Celldirect, Pendec,
Teeside Industrial Controls.
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